Top Moves to Land a Board Seat

How to Land a Board Seat

Getting a seat on the board of a publicly traded company is a goal of many legal professionals. For some, it seems the opportunity drops into the lap. For others, it takes a lot of hard work and career planning.

In the GC Advantage^SM webinar from 2020, “How to Land a Board Seat,” Marla Persky, former Senior Vice President, General Counsel, and Corporate Secretary for Boehringer Ingelheim USA, Ann Harlan, former Vice President, General Counsel, and Corporate Secretary for The J.M. Smucker Company, and Maureen Brundage, former Executive Vice President, General Counsel, Corporate Secretary & Chief Ethics Officer of The Chubb Corporation, provide their insights into steps that can be taken to enhance the chance of attaining this goal. The data provided has been updated since this webinar was recorded.

Look at data to gain insight into corporate boards

Even though the number of companies listed on the NYSE and NASDAQ continues to fluctuate due to mergers and acquisitions and bankruptcies, a considerable number of companies are looking for directors. Think about private companies, family-owned businesses, startups, mutual funds, subsidiaries of public companies that have independent boards, and companies with advisory boards that may lead to other opportunities. Public company boards have more limited openings.

There are 630,000 publicly traded companies worldwide

• Less than 1% of US companies are publicly traded.
• Women hold about 27% of all corporate board seats in the U.S. as of January 2022.

In the U.S., over 2,400 companies were listed on the NYSE in 2023 versus 2,800 companies listed on the NYSE in April 2019

• In 2023, over 3,300 companies were listed on the NASDAQ versus 3,100 companies in 2020. In April 2019, the number was 3,200.
• The average term of service for a board member in an S&P 500 company is 7.8 years.
• The last remaining S&P company with an all-male board added a woman to its ranks in 2019.

There is still much more work to be done with regard to board diversity

• In 2018, 22.8% of board directors in the S&P 500 were women. In 2022, that number rose to 30%.
• In the S&P 500 in 2021, 12.6% of board members were African-American, 5.1% were Asian, Native Hawaiian, or Pacific Islander, and 5.1% were Latino or Hispanic.
• A California law passed in 2018 required its companies to have at least one woman on their board. Another passed in 2020 requires boards to have at least one member from an underrepresented community.

If you’re interested in board service, it’s not just a U.S.-based game

There are opportunities for board service, particularly in Europe, as companies seek to diversify their boards to achieve an international group of directors. For those with international experience, language skills, and a willingness to travel, European companies provide an interesting opportunity. Many European countries have either mandatory requirements for diversity representation on their boards or mandatory disclosure requirements. If they don’t have a diverse board, they are obligated to publicly address what steps they have taken to define that diversity and why it seems to be lacking.

Think long and hard about whether you want to be on a board and why

Serving on a board takes time. When you already have a demanding job, it’s not always easy to make the commitment that will be required of you as a board member.

1. Be realistic. You really need to make sure you understand what’s involved, the time required, what the risks are, and what the rewards are. Don’t just seek a board position because it’s prestigious.
2. Not all companies allow employees to serve on a board. Find out your company’s policy on board service. It may be formal or informal, and even if the policy appears to allow it, you need to discuss it with your leadership team because they may not want you in that role.
3. Finally, be mindful of antitrust and potential conflicts of interest. For example, you cannot join the board of a competitor, so that can limit your opportunities because your industry expertise may be what will make you a compelling board candidate. You will need to wait until you either retire or change industries.

If you decide you’re ready, there are advantages to joining a board

In addition to allowing for professional growth and the ability to flex different muscles from your day-to-day, there is the compensation factor. Income is not always generated from board fees only, but also from stock options and other perquisites. Compensation is not insignificant; it’s nice, but it should not be the driving factor to pursue board service. Since service can be very time consuming and also offer potential liabilities, a per hour calculation may indicate that the fees may not really be all that high.

• Median compensation for directors on boards of S&P 500 companies, including both cash and equity awards, stood at around $316,091 in 2022.
• The smaller the company, the smaller the payout. The median was $174,226 for small companies and $126,625 at micro companies in 2019.

There is no compensation associated with not-for-profit boards and it is usually expected that board members will make financial contributions. It’s even more important, then, to be passionate about the mission of the organization.

The big question: How do you get on a board?

Although there’s not just one way to get on a board, there is a common theme and it centers around networking, networking, and more networking. To network effectively, develop a value proposition – an elevator pitch – as to why an organization would want you to be on the board, what’s relevant about your skills and experience, and your actual value proposition.

Here are some more tips and considerations:

• Consider what relationships you can leverage
• Do the recruiters have you on their radar?
  • If money is your prime motivator, recruiters will see that as a red flag
• Visibility – do people know you are interested?
• Be clear about what you want and don’t want
• Know your value proposition
• Do you have unique experience, key expertise, and/or valuable contacts to bring to the table?
• What are your transferrable skills and experience?
• Are you financially literate?

To sum up: network, be prepared, and give of your skills.

Evaluate your experience against the relative needs of boards

If you decide to pursue board service, step back and think about your experience and the expertise you have in dealing with matters that boards deal with. It’s an interesting process to go through and you may realize that you do have a lot of experience. When a company is looking to add or replace a board member, it has a matrix of skill sets it is looking to fill. The matrix is used to identify and narrow down candidates. There are a lot of hot areas of expertise that can change over time, while certain skills are always in demand. For example, the current pandemic has increased the need for experience with crisis management, pandemics, supply chain management, and other areas that are not necessarily legal skills. Generally speaking, the desired skill set is not title driven, but experience driven. As a lawyer, you can deconstruct your skills to see what would be attractive; this is part of your value proposition. Areas of expertise for potential board members to evaluate themselves for include:

• Finance
• Cybersecurity
• Digital
• Privacy
• Operational experience managing large teams
• Profit and loss responsibility
• Experience with transformation (growth, reorganization, business integration)
• Crisis management

Prepare yourself for a board position

Getting a seat on a corporate board could be the pinnacle of a successful legal career. BarkerGilmore understands the importance many put on this goal and can help bring it to fruition. As always, reach out anytime for further information about BarkerGilmore’s recruiting, leadership development, coaching, and consulting services.

To review a recording of this webinar and the related slides, including a list of resources, access the on-demand webinar, “How to Land a Board Seat.”